Economic Crime and Corporate Transparency Bill

Nigel Evans Excerpts

2nd reading
Thursday 13th October 2022 Commons Chamber

[Dean Russell]

I note the hon. Member’s comments. I will look into that further and follow up with more detail if required.

I thank all those across the House who have spoken. If I did not mention them, I apologise; and if I did, I hope that I covered their responses as best I can. I want to collaborate and listen, and I think that it is important that we as parliamentarians work together as best we can. It has been great to see the best of the House today. When we debate based on knowledge, experience and the ability to work together, we get the best legislation and the best outcomes, so I thank all hon. Members for that.

I look forward, based on the support that has been pledged, to working with all the hon. Members on the Committee. We have had an excellent and informative debate and I look forward to further discussion in Committee. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

Congratulations on your first outing, Minister.

Economic Crime and Corporate Transparency Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Economic Crime and Corporate Transparency Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 29 November 2022.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(Jacob Young.)

Question agreed to.

Economic Crime and Corporate Transparency Bill (Money)

King’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Economic Crime and Corporate Transparency Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Jacob Young.)

Question agreed to.

Economic Crime and Corporate Transparency Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Economic Crime and Corporate Transparency Bill, it is expedient to authorise:

(1) the charging of fees under the Companies Act 2006 at a level that takes into account a broader range of functions; and

(2) the payment of sums into the Consolidated Fund.—(Jacob Young.)

Question agreed to.

Economic Crime and Corporate Transparency Bill

Nigel Evans Excerpts

Report stage
Tuesday 24th January 2023 Commons Chamber

[Alison Thewliss]

I agree. The hon. Gentleman is anticipating my moving on to new clause 20, which talks to some of those issues in great detail, and a very good amendment it is, too. We have talked about whether the fee of £100 is arbitrary, a finger in the wind. But it is a figure that we can put in the Bill to say, “Let’s start here”. It gives Companies House the resource with which it can do work.

It was pointed out by some of those who gave evidence to the Bill Committee that, if we are seeking to clamp down on those hundreds of companies being set up every day at £12 a pop, we need to replace that money with legitimate money; £100 would go some way to dealing with that gap and that discrepancy. We need to ensure that that money goes to increasing the staff at Companies House, and the capacity, ability and expertise of the people Companies House hires, because much of this is becoming incredibly technical. It is important that it has the resource to do that. All the agencies involved need that money, but Companies House, as the front door to a lot of this stuff, needs to be properly resourced to be able to do that.

I note that the Minister talked about not wanting to put in legislation the sum of money that that fee would require, but that is not quite how other parts of the system work. I have sat on Statutory Instrument Committees that set the value of passport fees. I understand that the House sets the value of visa fees. Therefore, within the immigration system, the House decides what that fee is and sets that fee. Yet it is not deciding to do so for companies.

I do not know whether the Minister intends the matter of setting a fee —at £100, or whatever it might be—to come before an SI Committee at some point, but that is not what the Bill says he is going to do. It is important to recognise that, in one area of government, the Government are setting a fee and deciding how much people should pay for things and that other parts of the system should have cost recovery. The visa fee goes way above cost recovery; the passport fee perhaps less so. We are talking about £75.50 for a passport, compared with £12 to register a company and £1,538 for a visa. Those things are not quite the same. The company fee could bear being significantly higher than the £12 it is at the moment, and there is a place in legislation where we could set that because that is what the Government do in other areas of legislation.

New clause 22 tabled by the Official Opposition—entitled “Person convicted under the Minimum Wage Act not to be appointed as director”—is laudable in its aims because the people flouting the rules should not get to be company directors. Being a company director is a privilege, not a right. For those people who have been convicted of not complying with the legislation, it is perfectly reasonable that they could be disqualified for a serious breach of the National Minimum Wage Act 1998. It is reasonable to disqualify them.

On the issue of trust and company service providers, there is more that the Bill should and must do. It is unfortunate that the consultation on the Office for Professional Body AML Supervision is still ongoing, I understand, or certainly not concluded, because that should form part of this Bill. It has been widely acknowledged that OPBAS is not effective and is not working as the Government intended, but the Government do not yet know what they are going to do, how they will fix OPBAS, whether it will require further legislation in this House, whether it will involve stripping OPBAS of its AML supervision responsibilities and duties and, if it does, where those responsibilities will lie.

Our suggestion in new clause 35 is to make Companies House the AML supervisor in its own right. I have asked various questions on why the Government do not believe that Companies House should be an anti-money laundering supervisor. It seems to us on the SNP Benches that, if Companies House is the front door for every company registered in the United Kingdom, it should be liable for anti-money laundering regulations. If we are asking banks and other institutions to look at that, why not the Government agency responsible for the registration of every company on these islands?

That would give Companies House more duties and stop the flow of guff companies, terrible information and people who seek to defraud our constituents at the front door. It seems bizarre to me that the Government would not want to shut the front door firmly in the face of the crooks and the people who want to do that. There is also more that could be done, as mentioned in some of the Labour amendments, on the duty and powers of Companies House. We think Companies House should have powers, and not only powers, but duties—it should have to do those things.

I do not see why there is ambiguity in this legislation. If the Government are saying Companies House should do it, they should make Companies House do it, rather than leaving it up to interpretation or somebody’s decision further down the line. They should make Companies House do it. We all know that, if we are not forced to do a thing, we might not do a thing. We might not do the dishes, or the laundry, but if we are forced to, we certainly will. There is more that can be done to shut the door and tighten the regulations.

Through our amendments, we also seek to tighten the integrity of the register. That includes new clause 36 and our amendment 109. They reflect Labour’s amendment 103 and some of the other amendments that speak to the importance of identification numbers and the integrity of the register itself.

Much of the evidence we heard in the Bill Committee, as well as at various APPG events and other online events, indicates that the register as it stands is full of absolute guff. It has had—[Interruption.] The Minister waves the legislation, but the difficulty is that he is not intending to fix all that guff. He is allowing that guff to live on the register forever, because there is not enough in the Bill about the retrospective action Companies House has to take, looking through all the hundreds and thousands of companies that, over many years, have been allowed to filter on to the register unheeded.

Graham Barrow’s Twitter account is full every single day of companies being registered with information that is absolute rubbish. We must have a means of putting a duty and an obligation on Companies House to go back through the register, to clear it out and to say, “There’s no point having that stuff on there, because it is in effect meaningless and it’s gumming up the system for those who want to use the register in legitimate ways.”

We must be able to keep a check on Companies House: that is why new clause 36 says that it should seek to ensure that registrations contain accurate, up-to-date information and that it comes back to update Parliament on its progress updating that register. We cannot expect these things to happen overnight, because it is a big register and there is an awful lot on it, but we must ensure that it is accurate. If it is not, there are very real consequences for our constituents, as Graham Barrow pointed out. People have found themselves being defrauded when their names, their addresses or both have been used inaccurately. Those people have been chased or pursued by criminals and all kinds of things have happened to them because of fraudulent information on the Companies House register.

Someone may not even find out that their name has been used fraudulently. If they have a name such as James Smith, they may never find out. There are only three Alison Thewlisses on the register, but they are all me. There should be one identification—I should not be on the register as three people—and that is why we seek a unique identifier to track people throughout their lives. If someone’s name has been registered and used without their knowledge, with an address that is not theirs—a mailbox perhaps—they may not find out about it but may end up being liable for the actions of the fraudsters, so a lot more can be done on that.

We are also seeking through amendment 111 to limit the number of directorships that people can have. People may have multiple directorships, but is the director of 300 companies really able to do that job properly? Probably not. Those are probably not real companies and that person is probably not acting as a proper director. Again, on the Companies House register, many people are registered for hundreds of companies. As a red flag in the system, that should stand out to Companies House, which should be able to ask, “Is this person a real director?” and do more investigation. Our amendment would encourage that.

I am quite pleased to see that Government amendments 30 and 32 would give Scottish Ministers the power to present a petition to wind up Scottish limited partnerships, which have been comprehensively abused for several years now. That has been a real problem, and giving Scottish Ministers the power to do something about it is important. Although they are called “Scottish limited partnerships”, they have in practice very little to do with the Scottish Government, who can do little about them at the moment, so that is an important power. I am grateful to Michael Clancy of the Law Society of Scotland, who I hope is correct in his belief that that is a practical and useful measure. Will the Minister outline whether he has had any further discussions with Scottish Ministers, and how he thinks the power would work in practice?

I am prepared to leave my remarks at that—I appreciate that other Members want to get in and discuss other things—but I will leave the Minister with a quote from a Bill Committee evidence session on 25 October. Bill Browder, who has been a great champion of corporate transparency and standing against corruption internationally, told the Committee:

“You can write as many great laws as you want—there is some good stuff in this law, and good stuff in the previous laws—but if no one is going to enforce it, then you are never going to change the risk-reward and people are going to carry on doing stuff. All this will continue, and I will sit here 10 years from now making the same allegations about how this is a centre of money laundering.”––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 25 October 2022; c. 69, Q144.]

Nobody wants to be sitting here in 10 years—well, certainly not those of us on the SNP Benches—seeing money laundering going on unabated. We want the Government to take the opportunity that the Bill presents to close loopholes. To get that right, and get it right now, they should take the advice and knowledge that Members from across the House, and external organisations, have brought to the Bill. If the Government make the amendments and fix the Bill, they will have cross-party support for it.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call Dame Andrea Leadsom, I remind everybody that a number of cases are still before the courts, and we do not know all the cases that there are. Even though the sub judice rule does not apply when we are legislating, Mr Speaker has urged caution for those live cases. If Members could do us a favour and look up cases that they intend to mention, that would be really useful.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

It is a pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss). I agree with much of what she said, particularly about this House wishing her mum a very happy 70th birthday.

I also pay tribute to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). I find it amazing that he has only recently become a Minister, as he has been such a stalwart and incredibly diligent in promoting better performance by the banking and business sectors. It is great to see him in his rightful place at the Dispatch Box.

I rise to speak to new clause 20, in the name of my hon. Friend the Member for Barrow and Furness (Simon Fell), and to the two amendments I tabled that, very annoyingly, have not been selected, which are to do with phoenixing. I agree in general terms with the thrust of the debate: for reform of Companies House to be effective, it needs to be required to do new things. It is not enough to facilitate things; it needs to be given new duties and therefore the resources to be able to fulfil those duties. I can tell the House that in the brief time I spent as the Secretary of State for Business, Energy and Industrial Strategy, I had discussions with the excellent team of civil servants who are looking at company law reform, corporate governance and the Insolvency Service, and it is true to say, I am afraid, that they were not invited to go and talk to Ministers terribly often. They were definitely a bit of a Cinderella out there in BEIS, and this incredibly important area needs much more focus.

Economic Crime and Corporate Transparency Bill

Nigel Evans Excerpts

Report stage
Wednesday 25th January 2023 Commons Chamber

[Tom Tugendhat]

I thank my hon. Friend the Chair of the Justice Committee. As he knows, this is an area of great interest and for further discussion, which we are indeed looking at taking forward.

I finish by saying an enormous thank you to the Bill team, who are in the Box today—Tom Ball and the rest of the clan—who have done a fantastic job on Burns night, of all times. Because it is a time for us to find that we are no longer wee and tim’rous beasties, but are instead going to look for that fair trojan of the human race, the “puddin’-race”—forgive me—I look forward very much to being freed of the Dispatch Box and skipping off to the whisky and the haggis. On that, Mr Deputy Speaker, thank you.

[Mr Deputy Speaker (Mr Nigel Evans)]

Lucky Minister. I call the shadow Minister.

[Stephen Kinnock]

Like the Minister, I am keen to thank colleagues who have done so much and made so many valued contributions both to this Bill throughout its progress and in the debate today. I would very much like to thank the Bill team for the excellent work they have done, as always supporting us through our work and on many occasions helping to shed light where there was more or less total confusion, so we really appreciate that. I also thank our own staff. My hon. Friend the Member for Feltham and Heston (Seema Malhotra) and I are very fortunate to have wonderful teams supporting us—particularly colleagues such as Joe Bishop, Danny Hathaway and Joe Jervis—who have done so much in our teams to help us to get to this point.

It is worth just casting our minds back to October, when the Prime Minister stood on the steps of Downing Street and stated that he wanted a Government of “integrity, accountability and professionalism”. Well, we are almost 100 days into his tenure, so we are bound to take stock of how that is going, and I think it is fair to say that progress has been somewhat mixed. His Home Secretary has committed multiple breaches of the ministerial code, his chairman has just been exposed for tax avoidance on a massive scale and his claims—

[Mr Deputy Speaker]

Order. Mr Kinnock, you are going really wide of the mark on Third Reading. Please could you focus on the Bill that is having its Third Reading?

[Stephen Kinnock]

Thank you very much, Mr Deputy Speaker. I was just about to make the point that the Home Secretary has talked of learning the lessons from the golden visas issue, but she still has not published the full report. Of course, we have seen many oligarchs getting those visas since the invasion of Crimea, so I would contend that that is directly relevant to the debate we are having today.

That is the key point. It is about striving for integrity, professionalism and accountability. Of course the Bill offers an outstanding opportunity to deliver the change we all want to see. As we have said on many occasions, it is a step in the right direction and we are supporting it on Third Reading, but of course it still does not go far enough on SLAPPs, golden visas, information sharing, corporate transparency, corporate criminal liability, compensating victims or, indeed, structures for enforcement.

That final point is critical. We can have all the laws we want, but if we do not enforce them—whether we are talking about economic crime or anything else—they are pointless. These were points that Bill Browder made forcefully during the evidence that he gave to our Committee and, on cryptocurrency, that the expert Aidan Larkin made in a recent meeting with me. So we need to ensure that the agencies and institutions that should be fighting the illicit finance we all want to combat are given the resources they need, and are given the political support and licence to operate they have to have if they are going to be able to deliver on what we want them to deliver.

In conclusion, the fact is that we have left the back door open and allowed our country to become a kind of fixer for the world’s dictators, kleptocrats and gangsters. We cannot go around the world preaching about the rule of law and transparency until we get our own house in order. We should not have to wait for the next “Panama Papers” or the illegal invasion of another country to force us into taking action. I said at the outset of the debate that the Opposition have approached this Bill in a spirit of constructive engagement. That has not changed and it will not change. However, we have not so far seen from Ministers sufficient openness to input from Opposition Members, or even from many of their own Back Benchers, but we welcome the remarks that the Minister made in his winding-up speech. We look forward to the progress that we wish to see being made in the other place as rapidly as possible. It is not too late, there is still time, and I genuinely hope that the remaining stages of the Bill will see the gaps filled, the loopholes closed, and the opportunities seized.

[Alison Thewliss]

I thank everybody who has contributed to the Bill. It has been a cross-party and worthwhile effort, and everybody who has been part of it has felt that. I hope the Government do their bit and take that cross-party effort in the spirit in which we meant it. We want to improve the Bill and for it to do everything it can do right now, rather than waiting for some distant point in the future when we come back and say, “We’ve still got these problems and this Bill, which could have addressed them, has not.” We have been there before. We had the Sanctions and Anti-Money Laundering Bill, and other Bills while I have been in this House could have addressed or fixed these problems, yet we are here again today still not fixing all the problems. Who knows when parliamentary time will allow us to pass this way again.

I thank the experts who have given so much evidence to us individually and as parliamentarians in Committee and other places. In particular I thank Helena Wood of the Royal United Services Institute, Duncan Hames of Transparency International, Bill Browder, Oliver Bullough and Graham Barrow, the expert on Companies House. He has had his own health issues but has continued to campaign on Companies House. We wish him well and a speedy recovery, and all the best with his treatment.

I also thank my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands). He came on board with this Bill and was very supportive and helpful throughout its passage, raising the issue of phoenixing, which is of concern to many of our constituents. I encourage the Government to look at how they can fix phoenixing, and ensure that our constituents and companies based in our constituencies do not fall victim to companies that seek to abuse the system in such a way. I give great thanks to the right hon. Member for Barking (Dame Margaret Hodge) who has been such a tremendous champion for all these issues over a long period. Her expertise, her contribution, and the way that she convenes people within this place has been incredibly important for this agenda, and I cannot thank her enough for that work.

I thank the Clerks and the Bill team for all they have done to help support us throughout the passage of the Bill. Putting together all the amendments is not easy, and under pressures of time they have been incredibly helpful in putting them together for us. I also thank Mhairi Love in my own office, and Sarah Callaghan in the SNP research office. Again, they have been incredibly helpful in putting together research on all these areas, and putting up with me when I go down a big rabbit hole of all the things about economic crime that live in my head most of the time. They have been very helpful indeed over the course of things.

I want to make an announcement, Mr Deputy Speaker, before everybody departs—[Interruption.] I am not going to the Government Benches; the Minister is welcome over here any time. I am not sure that his constituents would expect him to be an SNP Member, but any time he feels the need that is fine. As it is Burns Night, there is haggis in the canteen, and I encourage everybody to partake and get their honest, sonsie faces over to the canteen before it goes. I am looking forward to mine. Not related in any way to the Bill, the Ayrshire Fiddlers—not that kind of fiddlers—are in Strangers Bar, and Members should go and see them because they are very good indeed. Crucially for this Bill they are playing the fiddle and they are not on the fiddle, so please go and give them your support.

I finish with some lines from our national bard:

“O, wad some power the giftie gie us

To see oursels as others see us!

It wad frae monie a blunder free us,

An’ foolish notion.”

I ask Ministers to reflect on how others will see the Bill and make amendments to it in the other place to make it befitting of the commitment that we all have to seeing economic crime removed.

[Mr Deputy Speaker (Mr Nigel Evans)]

Happy Burns Night, everyone.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Economic Crime and Corporate Transparency Bill

Nigel Evans Excerpts

Consideration of Lords amendments
Monday 4th September 2023 Commons Chamber

Consideration of Lords amendments

[Mr Deputy Speaker (Mr Nigel Evans)]

I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 6, 7, 9 to 12, 14 to 21, 30, 32 to 34, 54, 68, 115, 117, 120, 124, 125, 173, 174 and 178 to 201. If those Lords amendments are agreed to, I will cause the customary entry waiving Commons financial privilege to be entered in the Journal.

After Clause 46

Register of members: information to be included and powers to obtain it

6.50 pm

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move amendment (a) to Lords amendment 23.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss:

Lords amendment 151, and Government amendment (a).

Lords amendment 153, and Government amendments (a) to (c).

Lords amendments 115 and 117, and Government motions to disagree.

Lords amendment 159, and Government motion to disagree.

Lords amendment 161, Government motion to disagree, and Government amendment (a) in lieu.

Lords amendments 1 to 22 and 24 to 55.

Lords amendment 56, Government motion to disagree, and Government amendments (a) to (c) in lieu.

Lords amendments 57 to 114, 116, 118 to 150, 152, 154 to 158, 160 and 162 to 229.

[Kevin Hollinrake]

It is a pleasure to bring this Bill back to the House. It is crucial in ensuring that we can bear down on kleptocrats, criminals and terrorists who abuse our open economy, while also strengthening the UK’s reputation as a place where legitimate business can thrive. I am pleased to say that the Bill is now in a better place and there is a great deal more of it than when it left for the other place back in January. When introduced, the Bill ran to some 239 pages; it is now closer to 400. That reflects the spirit of genuine collaboration across both Houses and the fact that the Government have listened and taken many sensible proposals on board. I take this opportunity to thank Members of both Houses for their collaborative and cross-party approach.

The Government made significant amendments to the Bill in the other place. It is now unquestionably a milestone piece of legislation that takes the UK’s fight against economic crime to an entirely new level. I will summarise a few key changes, starting with the game-changing reforms to corporate criminal liability. As the Minister for Security, my right hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), committed to, the Government tabled amendments to introduce a new failure to prevent offence, which will drive cultural change towards improved fraud prevention in organisations and, failing that, hold organisations to account with prosecutions if they profit from fraudulent actions.

--- Later in debate ---

To conclude, this Bill is welcome but long overdue, and loopholes remain. Labour has laid out our arguments in support of the Lords amendments. They have been passed with cross-party support and in good faith, and they will clearly make the Bill stronger. The Government must seize the opportunity of this Bill to drive forward the transparency that we need and to help our law enforcement bodies to act. These are the choices the Government must make, and I urge them to reconsider the much-needed amendments from the other place today.

[Mr Deputy Speaker (Mr Nigel Evans)]

This business is protected for up to three hours and I am expecting multiple votes at the end of the debate, which could go on until 9.50 pm. The votes would not eat into the next business, which could go on for two hours. I hope that Members will therefore reflect on whether their speeches could be briefer than they had perhaps anticipated, as that would be helpful to everyone concerned, including the staff of the House.

[Mary Robinson (Cheadle) (Con)]

It is a pleasure to rise in support of Lords amendments 146 and 147, which introduce the power to strike out SLAPPs claims in relation to instances of economic crime. SLAPPs—strategic litigation against public participation claims—are described as

“legal actions typically brought…with the intention of harassing, intimidating and financially or psychologically exhausting opponents via improper use of the legal system.”

In essence, people who have such a claim brought against them are threatened into silence. They are a tool of intimidation and censorship, often used by wealthy individuals such as Russian oligarchs or by corporations against individuals such as journalists who rarely have the financial means to fight back.

SLAPPs are not brought with the intention of participants having their day in court; they are based on the power of inequality of arms and are intended to stifle free speech, with the allegations never seeing the light of day. For the purposes of this Bill, SLAPPs claims are defined as one where the claimant’s behaviour in relation to the matters concerned has or intends to have the effect of restraining the defendant’s freedom of speech, and that any disclosures they seek to restrain have to do with economic crime or would be made in the public interest to fight economic crime.

These amendments seek to give people more protection when facing a SLAPP claim in relation to economic crime only. They will be able to use a new early dismissal mechanism and, where a case does proceed, they will have the umbrella of a new cost protection regime. This matters because costs can be prohibitive when fighting legal cases, and indeed the financial risks are intended to deter people from fighting back. However, we cannot let people who seek to silence and intimidate win.

We should be concerned that, in 2022, the Coalition Against SLAPPs in Europe found that the UK was the top European destination for cross-border litigation, with 15 of 62 known transnational cases over a decade being filed here. Who knows, there may be more. One of the reasons we are in this position is that the UK has no anti-SLAPP legislation, and I therefore welcome the measures that are being introduced here.

Although the Bill concentrates on economic crime only, I encourage Ministers to make it the first step in bringing a stop to SLAPPs altogether. SLAPPs are not just a threat to freedom of speech and freedom of expression, they seek to stop so many other disclosures that are in the public interest.

As chair of the all-party parliamentary group for whistleblowing, I am committed to protecting and empowering people who speak out. I have been pushing for legislative change to ensure that people feel able, safe and supported to make disclosures that are in the public interest. Whistleblowers, as my hon. Friend the Minister knows, are pivotal in the fight against economic crime and fraud, with almost half of all fraud detected by whistleblowers. Because economic crime is often well hidden and difficult to trace, discovering it requires insiders to speak out and share their knowledge.

Take, for example, the £178 billion Danske Bank money laundering scheme, which was exposed only as a result of a whistleblower who had worked in the bank’s trading unit and who raised concerns about breaches of anti-money laundering procedures in its Estonian branch. His internal reports ignored, he turned to the US Securities and Exchange Commission. Once allegations made the news headlines, Danske Bank itself ordered an investigation that confirmed the whistleblower’s claims.

Although a worker may seek protection at an employment tribunal, journalists, who are often the target of SLAPPs, are not recognised as whistleblowers under UK law, and they are therefore afforded no protection. Yet due to the investigative nature of their work, they are among the most likely to acquire inside information and evidence of wrongdoing. At the moment our whistleblowing legislation, the Public Interest Disclosure Act 1998, applies only to workers and is meant to protect them from unfair dismissal or detriment at work that may result from their whistleblowing. Whistleblowers such as journalists, who fall outside our current laws and are prey to SLAPPs, will find support with these amendments where their disclosure relates to economic crime.

--- Later in debate ---

On nominees, this is such a simple amendment. I cannot understand the resistance to it. All it does is give us more information and enable us more readily to know who are the genuine owners of particular companies. Allowing individuals to hide behind nominees is absurd. Those are the things that really matter to me and that could make the difference and turn a Bill that is much better than it was but is still not perfect into a very powerful instrument that would allow us to go out and turn around very effectively the malignant disease that has infected the UK economy of massive money laundering, fraud and economic crime. I urge the Minister, “Be bold! You’ve got a year left to do it. Be bold in that year.”

[Mr Deputy Speaker (Mr Nigel Evans)]

Thank you for the way that you conducted your speech. I saw what you were doing, and thank you very much for helping.

[Sir Robert Buckland]

On a point of order, Mr Deputy Speaker, I seek your guidance on how I can put on the record that I refer hon. Members to my entry in the Register of Members’ Financial Interests.

[Mr Deputy Speaker (Mr Nigel Evans)]

I think you have already done it—thank you very much.

[Richard Fuller]

The Economic Crime and Corporate Transparency Bill is an important Bill that has cross-party support. I do not know whether it is appropriate to say that the right hon. Member for Barking (Dame Margaret Hodge) is in many ways its godmother, but she is certainly one of the key drivers of this important legislation. Whether it is perfect in her regard or nearly perfect in her regard, I would like to put on record that for all of us her efforts have been to the benefit of the country as a whole.

It is with some temerity that I wish to make a few points perhaps not in accordance with some of the comments made particularly by my right hon. and learned Friends the Members for Kenilworth and Southam (Sir Jeremy Wright) and for South Swindon (Sir Robert Buckland), who make the case for extending the failure to prevent fraud provisions to smaller businesses. I must say that they have not convinced me of the merits of their argument at this stage, and I think on balance I am with the Minister on this.

I am a Conservative and therefore change is perhaps always difficult for me, but I think particularly of what the implications may be for smaller businesses. I have not been persuaded by the other examples put forward of health and safety or bribery; I think there will be quite a chilling effect if the responsibilities for preventing fraud are extended to small business owners. I think it is appropriate and prudent that we build the measures, as the Minister has said, in his amendment (a) to Lords amendment 151. That is all I will say on Lords amendment 151,

However, I want to talk about another amendment that affects small businesses, which no other hon. Member has referred to in this debate: Lords amendment 30 regarding the disclosure of profit and loss accounts for certain companies, which the Bill will require of small businesses and microbusinesses that had previously been exempt. It potentially causes considerable concerns for owners of very small businesses if they are to have their profit and loss and their balance sheets publicly declared through Companies House reporting.

I ask hon. Members to imagine, if they will, that in a town or a community there are two or three competing laundries or plumbers, all of them maybe husband and wife, father and son or whatever—concentrating on what I want to say of a small business—or just sole proprietors, competing with each other in a small market. If their profit and loss statements were to be a matter of public knowledge, that would have very serious implications for local understanding of that person’s or that family’s personal wealth. It would have significant implications for local competition. The provisions that were in place in the Bill originally provided no protection for people in those circumstances. Yes, they will still provide the information, but surely it makes sense for companies in those circumstances not to have all their very specific financial information in the public domain.

I believe Lords amendment 30—the Minister might refer to this if he has time—seeks to provide a mechanism for a restriction on that disclosure of such personal information. The amendment lays out in proposed new subsections 468A(1) and (2) of the Companies Act 2006 that the Secretary of State

“may by regulations make provision requiring the registrar, on application or otherwise”,

and goes on further to say that regulations

“which provide for the making of an application may make provision”

as to who may make an application, the grounds on which an application can be made, the information to be included in it, the notice to be given, how an application is to be done and so on. My concern here is that Lords amendment 30, in seeking to correct the over-disclosure of public information, has put in its place quite a complicated application procedure.

Therefore, it would be helpful if the Minister could say what he has or what the Government have in mind about that application process. It would be ideal if that process were just a tick box. It would be ideal if that information could be communicated to accountants across this country who regularly have to file accounts on behalf of very small businesses, and it would be helpful if the Minister could advise that it is the Government’s intent that very small businesses in the circumstances I have outlined will not have very private personal financial information put in the public domain, although their information will still be required by Companies House and therefore placed under the protection that the Bill seeks to address.

--- Later in debate ---

The Bill is tremendous progress. It is the work of many people in this House, and we should be grateful for that, but we say to the Minister, why leave this Bill imperfect? He has it within his grasp to get a Bill that will be cheered from this House. He should seize that opportunity with both hands tonight.

[Mr Deputy Speaker (Mr Nigel Evans)]

Again, thank you for your brevity, Liam Byrne.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

I would like to pay my respects to my hon. Friend the Member for Feltham and Heston (Seema Malhotra) for her excellent opening on our behalf, as well as to my right hon. Friend the Member for Barking (Dame Margaret Hodge) for her excellent knowledge and understanding. The time she has put in is just unbelievable. She spoke about Bill Browder—no one can read his work without realising just how serious this issue is. I also thank my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), who covered it so aptly and brought it down to how dangerous and very serious this is for our democracy and our economic equality. What could happen, and what I think will happen, is frightening.

I want to focus on the importance of legislating on the failure to prevent fraud and money laundering, which are crimes committed in the shadows. Currently, there is a severe lack of provisions to prevent economic crime, which we know is the best, cheapest and most effective way to tackle our dirty money problem. These crimes are committed and witnessed by some of the most senior professionals at a company, and even if they are not participating but just happen to witness fraud, surely they must be under a legal duty to report it. Amendment 159 was introduced in the other place, and I pay my respects to the other place for its absolutely wonderful scrutiny of the Bill. I commend it to the Minister. He has spearheaded the Bill to where it is now, but he just needs to go that bit further.

We must have reasonable prevention mechanisms in place. The failure to prevent measures would work on multiple fronts. First and foremost, they would act as a deterrent, forcing companies to act and to take economic crime seriously if they know they would be held liable. Deterrence is proven to work. As a health and safety professional, I know that regulations to make companies and directors liable made tremendous inroads on health and safety. We may wonder why there were always so many disputes on construction sites, but it was because there was no health and safety. The workers had to fight for everything, and they could not do it without legislation. That is why we are here: to tackle things when they are not being tackled, and economic crime is not being tackled at the present time. That legislation resulted in a 90% drop in deaths and serious injuries on construction sites, which could have involved just building a few houses.

Secondly, regulatory factors such as the fines that exist are not sufficient to bring about the required change. After all, the fines could be a lot less than these companies are earning from economic crime, and they become a cost factored into doing business for those companies. This cannot be right, and it simply cannot continue. To our shame, Britain is the global hotbed of economic crime, at a cost of £350 billion a year. The people of Ukraine are feeling the impact of this unchecked economic crime, as some of the main benefactors have been Russian oligarchs, the Russian state and Putin himself. There are the Magnitsky sanctions, but it tells us a lot, does it not, when Putin kills his own people as a deterrent? When we look at the invasion of Ukraine, we cannot sit back and let this continue unchecked.

The Government amendments to cover this do not go far enough. Well-organised criminal entities would easily get around legislation that only touches the largest companies and the largest businesses. They take advantage of small and medium-sized businesses, as my right hon. Friend the Member for Birmingham, Hodge Hill said. That is exactly what they do—they do whatever it takes. They are cleverer than us, and they are doing it now. Well-organised criminals will get around it. As 64% of companies have experienced fraud, this would help those companies.

The Government legislation fails to make failure to prevent money laundering an offence. The justification for doing that is the money laundering regulations, yet there has been only one corporate conviction since they were introduced—that of NatWest in 2021. Clearly, the money laundering regulations are not good enough. The new legislation would make companies prove that they have the right procedures in place to prevent money laundering. This is the type of tough legislation we need to crack down on economic crime. For too long Britain has been the laundromat for foreign despots and dictators.

I heard a Member across the Floor talking about feeling the chill; what is more chilling than seeing what is going on and turning a blind eye, not washing the blood off our hands for the crimes against humanity committed for the very money being laundered around our country? I urge the Minister—I know where his heart is—not to throw away this wonderful opportunity to save so much. Democracy is at risk. It really is not acceptable. Please be brave enough—be brave enough and you will sleep at night.

Economic Crime and Corporate Transparency Bill

Nigel Evans Excerpts

Consideration of Lords message
Wednesday 13th September 2023 Commons Chamber

Consideration of Lords message

[Mr Deputy Speaker (Mr Nigel Evans)]

I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendment 161B. If that Lords amendment is agreed to, I will cause the customary entry waiving Commons financial privilege to be entered in the Journal. Dame Margaret Hodge has tabled two manuscript amendments to Lords amendment 161B, which have been selected by Mr Speaker. Papers will be distributed as soon as possible.

The deferred Division has now resumed in the No Lobby and injury time has been added, but Members do not have long.

After Clause 46

Register of members: information to be included and powers to obtain it

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That this House agrees with Lords amendments 23B and 23C.

[Mr Deputy Speaker]

With this it will be convenient to discuss the following:

Lords amendments 151B and 151C, Government motion to disagree, and Government motion to insist on amendment 151A.

Lords amendment 161B, Government motion to disagree, manuscript amendments (a) and (b), and Government motion to insist on amendment 161A.

[Kevin Hollinrake]

It is always a pleasure to speak with right hon. and hon. Members on the Economic Crime and Corporate Transparency Bill, which they will know is close to my heart and contains many vital measures for which I have long campaigned. The Bill will give us the powers we need to crack down on those who abuse our open economy, while ensuring that the vast majority of law-abiding businesses can grow and flourish.

I am grateful that both Houses have reached agreement on several issues, including those relating to the register of overseas entities and on removing the extension of the failure to prevent offence to money laundering. However, we are here today as agreement is still outstanding on a handful of remaining issues. I urge this House to accept the Government amendments, to settle those remaining topics and ensure that we can proceed to Royal Assent and implementation of these important reforms without delay.

I will now speak to those remaining topics. In the other place, the Government tabled two amendments on nominee shareholders—amendments 23B and 23C, in lieu of Commons amendment 23A, and in response to Lord Vaux’s amendment 23 on this topic from Report stage in the other place.

The Government’s amendments will allow the Secretary of State to make regulations to make further provision for the purpose of identifying persons with significant control in cases where shares are held by a nominee. This will allow the Government to work with relevant stakeholders to target the regulations in an effective and focused way that does not impose disproportionate burdens. Members of the other place agreed with the Government’s proposal and I trust that Members of this House will therefore agree with it today.

Lords amendments 151B and 151C would apply the exemption from the failure to prevent fraud offence to micro-entities only, rather than the Government’s position of excluding all small and medium-sized enterprises. The Government appreciate that Lord Garnier has moved closer to the Government’s position in agreeing to the principle of applying a threshold. However, our position remains that such an amendment would still incur significant costs to businesses. Reducing the exemption threshold to only micro-entities would increase one-off costs for businesses from around £500 million to £1.5 billion. The annual recurrent costs would increase from £60 million to over £192 million.

--- Later in debate ---

[Kit Malthouse (North West Hampshire) (Con)]

I am afraid that I am going to disappoint the right hon. Member for Barking (Dame Margaret Hodge) and speak very strongly against Lords amendments 151B and 151C, and I refer the House to my entry in the Register of Members' Financial Interests. I am surprised at Lord Garnier’s lack of any conception of what it is like to run a small business and the cumulative impact of Government regulation thereupon. The limits that are drawn here will draw in all manner of businesses, not least some eminent barristers who will fall foul of some of the numbers. Indeed, the average town-centre or city-centre pub will be covered by these regulations, such is their level of turnover and employees. It is worrying that I am perhaps the only small-business voice here and that there are not enough small-business people in the House to point out the problems with this issue.

As the Minister has said, hundreds of thousands of businesses will be drawn into the net. This is not necessarily about the compliance cost. The kind of regulation that comes with the prospect of a criminal offence has a chilling effect on small businesses. I speak as somebody who has owned one for nearly 30 years. When the Revenue, health and safety or trading standards show up with some new regulation, a whole industry cranks into place to terrify the owners of small businesses into some kind of compliance. Then along come the consultants, the accountants, the webinars and the newsletters telling us what we do and do not have to do. All of this distracts us from what we should be doing, which is trying to create employment and wealth and paying tax to the rest of the country.

The other issue is that this misunderstands the dynamic of businesses of this size. If a business of this size is going to engage in fraud, it is very possible—more than likely, actually—that the principal will be the instigator of that fraud. The idea that, alongside all the other offences, they should take steps to prevent themselves from perpetrating fraud seems ridiculous. Added to those general difficulties are the specific ones presented by the Heath Robinson-type calculation that every business will have to undertake every month: adding together how many employees there are and how many are employed in each month in year P, then taking away the number you first thought of and dividing it by the number of months. We are all going to have to do this every single month to work out whether we are above the threshold or not. Should we have the steps? Should we not have the steps? It all seems particularly nonsensical.

We know that a vast amount of this fraud takes place in larger companies, and they have the capacity and the wherewithal to deal with it. If my hon. Friends really think that senior barristers, whose turnover and assets will be more than the threshold, should be taking and showing procedural steps to avoid conducting fraud—do not forget that they are sole practitioners—then I am afraid we have gone through the looking glass of what Conservative Members think is appropriate.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Barry Gardiner.

[Barry Gardiner (Brent North) (Lab)]

In the interest of moving to the vote, I will not speak.

[Mr Deputy Speaker]

In which case we come to the Minister, with the leave of the House.

--- Later in debate ---

[Kevin Hollinrake]

We are very clear that we believe we have the right threshold. Larger companies clearly have the capacity and the human resources and risk compliance departments to mitigate these kinds of risks, whereas small and medium-sized enterprises are rightly much more focused on driving their business forward, which is very important to the economic health of our country. I think we have it right. My hon. Friend made a similar point in our previous debate on this issue, and he makes it very strongly. The fact that both he and my right hon. Friend the Member for North West Hampshire (Kit Malthouse) have made that point today counterbalances some of the arguments on the other side for extending the threshold further.

The hon. Member for Glasgow Central (Alison Thewliss) spoke about my previous comments. I think I have been pretty consistent in everything I have said in the House, unless she can point to anything different I have said from the Back Benches—[Interruption.] The shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), laughs, but I have always been a champion of the “failure to prevent” offence. If Members look back to the original Bill, which I think was 260 pages long—it is now nearly 400 pages long—they will see that I have been very keen to make sure that we listen to hon. Members on things like the “failure to prevent” offence and the identification doctrine, which both now feature in the Bill. All the cases I dealt with on the Back Benches, and indeed the information I have seen as a Minister, show that the kind of fraud the law enforcement agencies have not been able to prosecute is happening in larger companies, not smaller companies.

We believe that these circumstances are different from unexplained wealth orders, for which we obviously put cost-capping measures in place. Of course, unexplained wealth orders are not a process for taking somebody’s assets from them; they are a process for freezing assets. Lords amendment 161B is entirely different. In my view, there is definitely a civil liberties issue in terms of the power of the state versus the power of the individual. This measure potentially delivers an imbalance of power between the state and the individual. I would be keen to have a conversation with the very learned Members in the Chamber, but they must understand that the state is powerful and well resourced compared with the individual. Obviously there are some individuals who are very well resourced, but we still operate on the presumption of innocence in this country, and we have to be very careful. That is why we want a review to look into this and report back to Parliament within 12 months.

We have communicated with the National Crime Agency to ask for evidence on where it feels these measures are needed. All law enforcement agencies want more power and more provision, of course, but I have seen no clear, significant evidence from the enforcement agencies that cost-capping orders would be needed in this situation.

I, too, have spoken to Bill Browder, and I have spoken to officials about whether this measure is needed in the UK regime. Members will be aware that Mr Browder principally looks at the parallels with the US situation, where adverse costs do not apply across the system. Members have talked about the chilling effect of such provisions, but there is potentially a chilling effect on the other side of the equation.

Yesterday I met a barrister who defends people against such actions, and he was very concerned about the imbalance of power that would result. I have not seen any significant evidence, and I am very interested in the evidence that my hon. Friend the Member for Bromley and Chislehurst gave to the Cambridge crime symposium, at which I have spoken in the past, on whether this is needed. However, I am not aware of anything the Justice Committee or the Law Commission has done in this area. It is important that we look at that kind of evidence before we implement these kinds of measures.

The right hon. Member for Barking (Dame Margaret Hodge) accuses me of being party political. I am surprised she takes that view. I have worked on a cross-party basis from the Back Benches and, as she knows, I do the same from the Front Bench, and I will continue to do so to make sure that we get this legislation right.

In conclusion, throughout the passage of the Bill, the Government have worked hard to get the balance right between tackling economic crime and ensuring that the UK remains a place where law-abiding businesses can flourish without unnecessary burdens. The motions tabled by the Government today achieve that balanced and proportionate approach, and I therefore urge Members on both sides of the House to support them.

Lords amendments 23B and 23C agreed to.

After Clause 180

Failure to prevent fraud

Motion made, and Question put,

That this House disagrees with the Lords in their Amendments 151B and 151C and insists on its Amendment 151A.—(Kevin Hollinrake.)

The House proceeded to a Division.

[Mr Deputy Speaker (Mr Nigel Evans)]

Will the Serjeant at Arms investigate the delay in the Aye Lobby?

--- Later in debate ---

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

On a point of order, Mr Deputy Speaker. The inexplicable delay in counting votes has now risked denying the House a vote on ensuring that this Bill to tackle economic crime is as strong as it could be. Will you therefore advise the House on what action we can now take to ensure that in the debates that lie ahead we can come back to this question and make sure we have the right provisions in place in statute and that this country is no longer a soft touch for economic crime?

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the right hon. Gentleman for his point of order. As he knows, we are now going to move on to the motion on amendment 161B, and if that is annulled there will be other opportunities, I am sure.

After Clause 187

Civil recovery: costs of proceedings

Resolved,

That this House disagrees with the Lords in their amendment 161B in lieu of Commons amendment 161A and insists on amendment 161A in lieu.—(Kevin Hollinrake.)

Motion made, and Question put forthwith (Standing Order No. 83H(2)), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing with their amendments 151B, 151C and 161B.

That Kevin Hollinrake, Scott Mann, James Sunderland, Jane Stevenson, Rushanara Ali, Taiwo Owatemi and Alison Thewliss be members of the Committee;

That Kevin Hollinrake be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(Kevin Hollinrake.)

Question agreed to.

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

[Sir Robert Buckland (South Swindon) (Con)]

On a point of order, Mr Deputy Speaker. May I seek your guidance about how I properly place on the record a reference to my entry in the Register of Members’ Financial Interests in the context of my speech in the debate about the Lords message on the Economic Crime and Corporate Transparency Bill?

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the right hon. and learned Member for his point of order. He has recognised that he made an omission and he has corrected it at the earliest opportunity. I thank him for doing so.